USD/CAD Price Analysis: Downside resumes as US Dollar retreats and oil prices rebound
- USD/CAD has continued its four-day losing spell after dropping below 1.3333.
- The USD Index is on the verge of testing a two-month low of 100.82 as US inflation expectations have receded sharply.
- US firms passed on the benefit of lower gasoline prices to end consumers by lowering prices of goods and services.
The USD/CAD pair has continued its four-day losing streak by slipping below Thursday’s low of 1.3333 in the Asian session. The Loonie asset has attracted significant offers as oil prices have rebounded after a steep correction and the US Dollar Index (DXY) has resumed its downside journey after a short-loved pullback to near 101.00.
It is worth noting that Canada is the leading exporter of oil to the United States and a recovery in oil prices will support the Canadian Dollar.
The USD Index is on the verge of testing a two-month low of 100.82 as United States consumer inflation expectations have receded sharply after firms passed on the benefit of lower gasoline prices to end consumers by lowering prices of goods and services at factory gates. This is indicating that the Federal Reserve (Fed) will soon achieve price stability.
USD/CAD resumed its downside journey after a pullback move to near 10-period Exponential Moving Average (EMA) around 1.3533 on a daily scale. Investors capitalized on the pullback move as a fresh selling opportunity. Potential supports are placed from February 01 and 15 November 2022 low at 1.3267 and 1.3226 respectively.
The Relative Strength Index (RSI) (14) has slipped again into the bearish range of 20.00-40.00 after a failed attempt of a range shift, which indicates that the upside is capped.
For further downside, a break below the round-level support of 1.3300 will drag the Loonie asset toward February 01 low at 1.3267, followed by 15 November 2022 low at 1.3226.
Alternatively, a decisive break above April 10 high at 1.3554 will drive the asset toward the round-level resistance at 1.3600. A breach of the 1.3600 resistance will expose the asset to March 23 low at 1.3630.